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FG Exceeds Loan Target By N1.12trn, Borrows N5.3trn

Published

2 years ago

November 1, 2022

The Federal Government exceeded its borrowing by N1.15trillion for the period between January and August, 2022.
A copy of the public presentation of the 2023 proposed budget by the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, showed that the Federal Government planned to borrow N6.10trillion in 2022.
A breakdown shows that the Federal Government planned to get N3.53trillion from domestic creditors and N2.57trillion from foreign creditors.
According to the document, the Federal Government estimated that it would borrow N4.07trillion between January and August, 2022.
However, the Federal Government accumulated N5.33trillion debt within the period under review, which is N1.15trillion higher than the expected N4.07trillion planned debt.
A further breakdown showed that the Federal Government borrowed N4.82trillion from domestic creditors and N510.21billion from foreign creditors.
The debt from domestic creditors includes the Federal Government’s borrowing from the Central Bank of Nigeria through the Ways and Means Advances.
Ways and Means’ Advances are loan facilities through which the CBN finances the shortfalls in the government’s budget.
The Federal Government recently borrowed a total of N4.61trillion from the Central Bank of Nigeria through Ways and Means Advances between January and August, 2022.
This means that majority of the Federal Government’s domestic debt came from its debt to the CBN.
The CBN said on its website that the Federal Government’s borrowing from it through the Ways and Means Advances could have adverse effects on the bank’s monetary policy to the detriment of domestic prices and exchange rates.
“The direct consequence of central banks’ financing of deficits are distortions or surges in monetary base leading to adverse effects on domestic prices and exchange rates i.e. macroeconomic instability because of excess liquidity that has been injected into the economy,” it said.
The World Bank had, last November, warned the Nigerian government against financing deficits by borrowing from the CBN through the Ways and Means Advances, saying this put fiscal pressures on the country’s expenditures.
Despite warnings from experts and organisations, the Federal Government has kept borrowing from the CBN to fund budget deficits.
Also, the N22.07trillion owed the apex bank by the Federal Government is not part of the country’s total public debt stock, which stood at N42.84trillion as of June 2022, according to the Debt Management Office.
The country’s debt rose by N30.72trillion between July, 2015 and June, 2022, according to data released by the DMO.
According to the DMO statistics, Nigeria’s total debt as of June 30, 2015, stood at N12.12trillion.
By June 30, 2022, the figure had risen to N42.84trillion, which showed an increase of 253.47per cent.
Despite the high increase in debt over the years, the government still plans to borrow N8.4trillion in 2023.
Experts have kicked against the Federal Government’s proclivity for debt, which they have described as unsustainable.
An Abuja-based policy think tank, Agora Policy, said Nigeria’s debt was unsustainable and put the country in a perilous situation due to the high cost of debt servicing.
The group advised the government to deepen and diversify sources of revenue, re-calibrate expenditure to spend smartly, and invest efficiently.
A former President of the National Accountants of Nigeria, Dr Sam Nzekwe, agreed that Nigeria’s debt was unsustainable.
He said, “The debt is huge. If you look at the budget, you will see that a huge sum of money is used to service debts. This is just the debt service charge. We are yet to talk about the principal.”
He also said that instead of focusing on the debt to GDP ratio, the focus should be on debt service to revenue ratio.
He further noted that the country had a revenue problem.
A development economist, Dr AliyuIlias, criticised the government for its constant reliance on borrowing, which was not healthy for the economy.
He further urged the government to seek better ways of generating revenue rather than persistently borrowing.
However, the finance minister, when she appeared before the House of Representatives Committee on Finance, last week, explained that the over-borrowing was a deliberate plan to ensure that money was released early for capital projects.
She said, “We are borrowing faster than what we had prorated. It was a conscious decision to make sure we have funds early enough to release for the implementation of capital projects.”
Meanwhile, the amount budgeted for recurrent expenditures has increased from N2.61trillion spent in 2015 to N8.27trillion in the proposed 2023 budget, according to data from the Budget Office of the Federation.
This shows an increase of N5.66trillion or 216.86per cent in six years, fuelling concerns over the rising cost of government overheads amid declining revenue and weakening economy.
Analysis revealed that recurrent expenditure recorded significant increases each year during the period under the review.
The former President, Dr Goodluck Jonathan, approved a N4.49trillion budget for 2015, which included a N2.61trillion recurrent expenditure.
Capital expenditure was N557billion, while money budgeted for debt service was N953.62billion.
There was a fiscal deficit of N1.08trillion.
The recurrent expenditure rose slightly by 1.53per cent or N40billion to N2.65trillion in 2016, out of a total expenditure of N6.06trillion.
Capital expenditure was N1.59trillion, while money budgeted for debt service was N1.48trillion.
There was a fiscal deficit of N2.2trillion.
In 2017, it rose to N2.99trillion, representing an increase of N340billion or 12.83per cent.
Out of a total expenditure of N7.44trillion, capital expenditure was N2.18trillion, while money budgeted for debt service was N1.66trillion.
There was a fiscal deficit of N2.36trillion.
In 2018, recurrent expenditure rose by N520billion or 17.39per cent, raising the total recurrent expenditure to N3.51trillion.
Out of a total expenditure of N9.12trillion, capital expenditure was N2.87trillion, while money budgeted for debt service was N2.01trillion.
There was a fiscal deficit of N1.95trillion.
The following year, the recurrent expenditure increased by N540billion or 15.38per cent to N4.05trillion.
Out of a total expenditure of N8.91trillion, capital expenditure was N2.09trillion, while money budgeted for debt service was N2.25trillion.
There was a fiscal deficit of N1.95trillion.
The recurrent expenditure was N4.84trillion in 2020, out of a total expenditure of N10.59trillion.
This shows an increase of N790billion or 19.51per cent.
Capital expenditure was N2.47trillion, while money budgeted for debt service was N2.7trillion.
There was a fiscal deficit of N2.28trillion.
However, the increase in 2020 may be attributed to the inclusion of the new national minimum wage in the budget.
In the 2022 budget, the recurrent expenditure hit N6.91trillion, representing an increase of N1.27trillion or 22.52per cent.
Out of a total expenditure of N17.13trillion, capital expenditure was N5.47trillion, while money budgeted for debt service was N3.88trillion.
There was a fiscal deficit of N6.26trillion.
President MuhammaduBuhari (rtd), recently presented the proposed 2023 budget to the National Assembly.
The proposed 2023 budget shows that the proposed recurrent expenditure is N8.27trillion, which is an increase of N19.68per cent or 1.36trillion from the previous year.
Out of a total expenditure of N20.01trillion, capital expenditure was N4.93trillion, while money budgeted for debt service was N6.65trillion.
There was a fiscal deficit of N10.7trillion.
The 2023 recurrent expenditure represents 41.33per cent of the nation’s entire budget and is the single largest element of the budget.
It is also N3.78billion more than the total expenditure for 2015.
From the 2023 recurrent (non-debt) expenditures, personnel costs gulped N4.08trillion; pensions, gratuities and retirees’ benefits took N721.46billion, while overheads cost N443.28billion.
Within the years of the Buhari’s regime, including 2015, a total of N38.82trillion has been budgeted for recurrent expenditures.
This total exceeds the N20.01trillion total budget proposed for the 2023 fiscal year.
Experts have lamented the constant increase in the nation’s cost of governance.
In May 2021, the Federal Government, through the Minister of Finance, Zainab Ahmed, had said it was working to reduce the high cost of governance by doing away with unnecessary expenditures, which might include salary cuts for workers.
However, the increase in recurrent expenditures in the 2023 budget suggests the government may have backpedalled on the plan.
Economic and financial experts have expressed concerns over what they described as significant increases in government expenditure, saying they were worrisome because a large chunk of government revenue had been allocated to recurrent expenditure instead of capital projects that drove economic growth.
The Registrar and Chief Executive Officer, National Institute of Credit Administration, Prof Chris Onalo, has stressed the need for the government to streamline its expenditure in order to manage its debt profile.
He said, “Everybody is concerned about the rising debt profile. And the reason it is going in that direction is because first, our recurrent expenditure is too big. When you borrow money, you don’t borrow to pay salaries. You don’t borrow to finance recurrent expenditure. That is where we have the biggest problem.
“The size of our civil service needs to be trimmed down. Some of the ministries have to be allowed to go. And then, we need a very serious audit of the Federal Government’s workforce. And until we do that, we will not be able to run the civil service system transparently. The government expenditure profile needs to be streamlined very seriously.”
An Associate Professor of Economics at Pan Atlantic University, Dr OlalekanAworinde, recently linked the development to rising salaries and the upcoming election.

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Tinubu Pledges Peace, Justice, Development in Ogoniland….Fubara Lauds President on Peace Talks

Published

11 hours ago

January 22, 2025

The Tide

President Bola Tinubu has assured the people of Ogoniland that his administration will prioritize peace, justice, and sustainable development in the region.

The President said this during a closed-door meeting with the leaders of Ogoniland led by the Governor of Rivers State, Siminalayi Fubara, at the Council Chamber of the State House, Abuja, yesterday.

The Special Adviser to the President on Information and Strategy, Bayo Onanuga, disclosed details of the meeting in a statement titled ‘President Tinubu pledges peace, justice, development in Ogoniland.’

At the meeting, Tinubu called for unity and reconciliation, urging the Ogoni people to set aside historical grievances and work together to achieve peace, development, and a clean environment.“

We must work together with mutual trust. Go back home, do more consultations, and embrace others.“We must make this trip worthwhile by bringing peace, development, and a clean environment back to Ogoniland,” Tinubu said.

“We cannot in any way rewrite history, but we can correct some anomalies of the past going forward. We cannot heal the wounds if we continue to be angry,” he added.

Tinubu directed the National Security Adviser, Nuhu Ribadu, to coordinate the negotiations as he called for inclusive consultation and mutual understanding.

The President commended the delegation for embracing the Federal Government-led dialogue and emphasised the need for collaboration, trust, and inclusiveness to resolve lingering issues in the region.

He asked ministers, the NNPCL, and the Rivers State Government to cooperate with the Office of the National Security Adviser to achieve this mandate.Tinubu told his guests, “It is a great honour for me to have this meeting, which is an opportunity to dialogue with the people of Ogoniland.

“It has been many years since your children and myself partnered to resist military dictatorship in this country. No one dreamt I would be in this chair as President, but we thank God.

“Many of your sons present here were my friends and co-travellers in the streets of Nigeria, Europe, and America. I know what to do in memory of our beloved ones so that their sacrifices will not be in vain,.

”Fubara thanked the President for his support of the Ogoni people and for welcoming an all-inclusive representation of the people to the Presidential Villa.

He said the meeting was a follow-up to an assignment the President gave him through the National Security Adviser.

Emphasising the importance of resuming oil operations in Ogoniland, the governor pledged the delegation’s commitment to adhering to the President’s instructions and providing the necessary support to achieve the government’s objectives.“

What we are doing here today is to concretise the love and respect we have for the President for being behind this meeting and for him to tell us to go back and continue the consultations with a timeline so that the resumption of oil production in Ogoniland will commence,” Fubara said.

On his part, Ribadu commended the Ogoni people for their trust in President Tinubu and for embracing dialogue as a path to meaningful progress and enduring solutions.

“Guided by Mr. President’s vision that every voice is heard and every interest is considered, my office, the DSS, the government of Rivers State and the Minister of FCT embarked on a diligent and consultative process to assemble this delegation,” Ribadu said.

He noted that the over 50-member delegation that met with the President reflected the rich diversity of Ogoni society, representing various constituencies, interests, and viewpoints.

“The presence of this delegation is a testament to the Ogoni people’s readiness to engage constructively in the pursuit of peace, justice, and sustainable development,” he noted.

A representative of the Ogoni leadership, King Festus Babari Bagia Gberesaako XIII, the Gberemene of Gokana Kingdom, expressed the community leaders’ willingness to engage in the process of finding lasting solutions to the lingering challenges in Ogoniland.

Meanwhile, the Minister of Environment, Balarabe Lawal, said the Federal Government aimed to conclude the Ogoni cleanup within three to four years, with half of the project completed.

The delegation included Senators Lee Maeba, Magnus Abe, Olaka Nwogu, Victor Giadom, Kenneth Kobani, Monsignor Pius Kii, Leedom Mitee, Senators Bennett Birabi, Barry Mpigi, Prof. B. Fakae, among others.Also in attendance were the National Security Adviser, Nuhu Ribadu; Chief of Staff to the President, Femi Gbajabiamila; Minister of Information and National Orientation, Idris Mohammed; Minister of Regional Development, Abubakar Momoh; Minister of Environment, Balarabe Abbas; and the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari.

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Nigeria, S/Arabia, Deepen Ties On Solid Mineral Exploration

Published

12 hours ago

January 22, 2025

The Tide

Nigeria and Saudi Arabia have renewed plans to build the capacity of their geological agencies by leveraging the breakthroughs recorded by Saudi firms in mineral exploration.

Segun Tomori, the Special Assistant on Media to the Minister of Solid Minerals Development, Dele Alake, made this known in a statement in Abuja, yesterday.

He said that this was on the sidelines of the Future Minerals Forum (FMF) in Riyadh, Saudi Arabia,

Tomori said the decision was taken at a closed-door meeting between a delegation from Saudi Arabia led by its Minister of Mining, Bandar Al-Khorayef, and Nigeria’s delegation led by Alake.

He said Alake proposed for both countries to collaborate on areas of economic advantage, urging partnerships based on the sector’s value chain.

Citing Saudi Arabia’s renowned gold market as an example, Alake said Nigeria’s gold refineries could access the Saudi market under protective clauses, guaranteeing expansion opportunities for both economies.

On his part, the Saudi Minister disclosed that its government and the private sector were working together to introduce new technologies for mineral exploration.

He emphasised that new products were showcased at the minerals forum conference to foster business partnerships and raise awareness of their applications.

Alake also met with officials of the Saudi Chamber of Commerce, where he canvassed their investment in Nigeria’s mining sector.

He urged them to leverage the large deposits of lithium and iron ore, which were being processed in Nigeria in line with the value addition policy.

To de-risk their investment, the minister promised to direct the Nigerian Geological Survey Agency, to provide relevant data on their minerals of interest.

According to the minister, the global transition toward electric machines, which use lithium batteries, has positioned Nigeria as a critical supplier of minerals

Tomori quoted him saying, “Partnership with Saudi investors will encourage the export of finished industrial inputs.”

Acknowledging the investment in steel production in Saudi Arabia, the minister cited examples of companies processing iron ore to steel in Nigeria as precedents that could be replicated.

He said that Nigeria was committed to creating an enabling environment for investors to ensure smooth operations in mining projects.

The minister said they included the establishment of laboratories for the separation and analysis of mineral samples, among other facilities.

“Nigeria has the best certified laboratories for minerals in West Africa,” he said.

The Tide source reports that the 2025 Future Minerals Forum (FMF) with the theme: “Year of Impact,’ was held from Jan. 14 to 16 in Riyadh, Saudi Arabia.

The meeting was to bolster international collaboration in producing the critical minerals essential for the global energy transition.

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FG, States, Local Govts Share N1.42trn In January

Published

13 hours ago

January 22, 2025

The Tide

The Federation Account Allocation Committee (FAAC) has disbursed a total sum of N 1.424 trillion to federal, state and local governments. The total amount is derived from the federation account revenue generated in December 2024.

The disbursement, which was made at the January 2025 Federation Account Allocation Committee (FAAC) meeting held in Abuja, last Friday comprising distributable statutory revenue of N386.124 billion, distributable Value Added Tax (VAT) revenue of N604.872 billion, Electronic Money Transfer Levy (EMTL) revenue of N31.211 billion and Exchange Difference revenue of N402.714 billion.

According to a communiqué issued by the committee, the total gross revenue of N2.310 trillion was available in the month of December 2024, while the total deduction for cost of collection was N84.780 billion, total transfers, interventions and refunds was N801.175 billion.

According to the communiqué, gross statutory revenue of N1.226 trillion was received for the month of December 2024. This was lower than the sum of N1.827 trillion received in the month of November 2024 by N600.988 billion.

Also, the gross revenue of N649.561 billion was available from the Value Added Tax (VAT) in December 2024. This was higher than the N628.973 billion available in the month of November 2024 by N20.588 billion.

The communiqué stated that from the N1.424 trillion total distributable revenue, the federal government received total sum of N451.193 billion while state governments received total sum of N498.498 billion.

The local government councils received total sum of N361.754 billion and a total sum of N113.477 billion (13 percent of mineral revenue) was shared to the benefiting states as derivation revenue.

On the N386.124 billion distributable statutory revenue, the Federal Government received N167.690 billion and the state governments received N85.055 billion while local government councils received N65.574 billion. The sum of N67.806 billion (13 percent of mineral revenue) was shared to the benefiting States as derivation revenue.

“From the N604.872 billion distributable Value Added Tax (VAT) revenue, the Federal Government received N90.731 billion, the State Governments received N302.436 billion and the Local Government Councils received N211.705 billion.

“A total sum of N4.682 billion was received by the Federal Government from the N31.211 billion Electronic Money Transfer Levy (EMTL). The State Governments received N15.605 billion and the Local Government Councils received N10.924 billion.

“From the N402.714 billion Exchange Difference revenue, the communiqué stated that the Federal Government received N188.090 billion and the State Governments received N95.402 billion. The Local Government Councils received N73.551 billion, while the sum of N45.671 billion (13% of mineral revenue) was shared to the benefiting States as derivation revenue,” the communique stated.